Board

2012

Business Outlook

Chairman’s overview

David Rugg Chairman

A year ago in Christie + Co’s Business Outlook 2011 we reported that despite the difficulties in the business environment, average property prices in hospitality, leisure, care and retail businesses had plateaued and perhaps had emerged from the bottom of the value curve. Twelve months on and even the gloomiest forecasters would never have predicted quite how deep the recession would be, nor the extent of the crisis that would engulf the financial markets, particularly across the Eurozone. Consequently, and in the face of continuing economic uncertainty, the plateauing of property prices in 2010 must now be viewed as a step towards prices once again settling at a lower level in 2011. However, this is a time for realism and it should be acknowledged that yield ranges remain on a par with those seen in the 1990s. This is not new territory for the sectors in which Christie + Co operates, it is more a case of trading assets transacting at former multiples of trading profit. Cash transactions dominant In 2011 we saw a transactional market where cash was everything. In some cases, notably for Christie + Co in its sales on behalf of the administrators of a number of von Essen Hotels, we saw cash deals being done as a prelude to debt finance being secured. Administrator-led sales were more common during the year, but the market was able to absorb the number of businesses being made available for sale. This is surely a sign that the market mechanism remains as effective as ever, even as values change. There has been no stasis, which has to be encouraging in these difficult and financially uncertain times.

“ In the face of continuing economic uncertainty, the plateauing of property prices in 2010 must now be viewed as a step towards prices once again settling at a lower level in 2011. However, yield ranges remain on a par with those seen in the 1990s.”

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